Apartment market conditions improved across all four indexes of the Q3 2015 National Multifamily Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions. The market tightness (53), sales volume (53), equity financing (52) and debt financing (54) indexes all landed above the breakeven level of 50, indicating growth over the past three months.
“The strong apartment industry run-up shows no signs of ebbing any time soon,” said Mark Obrinsky, NMHC’s SVP of Research and Chief Economist. “Markets remain pretty tight, even as new apartment construction continues to increase.”
Consumer demand for apartments increased for the seventh consecutive quarter, with the Market Tightness Index coming in at 53, compared to 61 last quarter. Only 16 percent reported loosening conditions.
The Sales Volume Index remained unchanged at 53, indicating increased transaction volume from the previous quarter. The Equity Financing Index rose by three points to 52 – back above the breakeven level of 50. Similarly, the Debt Financing Index bounced back above 50, rising 19 points to 54.
“Acquisition capital remains plentiful, although some respondents noted that development capital remains focused primarily on infill locations in central cities. For debt capital, lower Treasury yields have countered the rising spreads, leaving rates in a good place,” said Obrinsky.
The Quarterly Survey special question asked about construction activity, with more than twice as many respondents (35 percent) indicating more construction activity than those reporting slower activity (14 percent). About half (51 percent) reported construction activity as similar to three months ago.